A Beginner’s Guide to Investing Cryptocurrency in an IRA

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If you have been keeping tabs on cryptocurrency news, you undoubtedly know that the potential gains you could reap from investing in this asset could set you up for a comfortable financial life in the future.

Cryptocurrencies have come a long way in a relatively short time, growing from a market capitalization of $759.38 billion at the start of 2018 to an incredible all-time high of $3.048 trillion in November 2024. This phenomenal growth has attracted and continues to attract many more investors. So, you can bet that crypto will remain a viable investment going into the future.

So, do you want a piece of the potentially high returns from crypto investments in your nest egg? If yes, it is time to turbocharge your retirement savings by investing in this relatively new asset via a cryptocurrency Individual Retirement Account (IRA) from providers like Viva Capital.

But before you do, here is a comprehensive guide to investing in a cryptocurrency in an IRA to help you understand what it is all about.

What Is a Crypto IRA?

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A cryptocurrency IRA or Bitcoin IRA is a self-directed retirement account that allows you to invest in Bitcoin and other cryptocurrencies, which are all excluded from traditional IRAs. And why is that? The Internal Revenue Service (IRS) designates cryptocurrencies as a type of property, off-limits to regular IRAs.

Cryptocurrency IRAs have been gaining popularity recently because they combine the tax advantages of conventional IRAs with the growth potential of cryptocurrencies. As of writing this guide, several companies and platforms offer crypto IRAs for you and other investors who want to include crypto in their retirement accounts.

So, be sure to do enough research to find a trusted company or custodian.

How Does a Crypto/Bitcoin IRA Work?

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Generally, a crypto IRA works pretty much the same as a conventional IRA, save for the fact that you are putting your cash into crypto instead of stocks, bonds, or mutual funds. You can decide between ordinary and Roth self-directed IRAs to enjoy the tax advantages that come with them.

Regarding contributions, you are subject to the same yearly contribution limits, in essence, $6,000 or $7,000 if you are 50 years or older in 2024 and 2024. And not to forget, you can rollover money from a traditional IRA or 401(k) to a self-directed IRA.

Although self-directed IRAs are pretty similar to typical IRAs, they have notable differences. Rather than allow you to establish an IRA, purchase, and sell securities in one place, crypto IRAs might require you to be more hands-on. That brings us to the main difference between a traditional IRA and a cryptocurrency IRA, which is the three different parties you will interact with:

  • Self-directed IRA custodian: This party holds your IRA and keeps it safe. Besides that, the custodian sees to it that your account complies with the specifications of the IRS and government. They take on the duties that banks and other financial institutions usually handle with conventional IRAs.
  • A crypto exchange: This entity handles your crypto trades. It is pretty much the same as a stock market, except that only crypto assets are traded instead of stocks, bods, and mutual funds. You will buy your Ether, Doge, Bitcoin, or any other crypto here.
  • Wallet provider: This party secures your crypto assets. Usually, a crypto IRA custodian will partner with a trusted wallet provider that safely holds the private keys to your crypto.

How to Add Crypto to Your Retirement Account

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Now that you understand what a crypto IRA is and how it works, it is time to add crypto to your retirement account. So, here is how to go about it:

  1. Open a self-directed IRA through a custodian.
  2. Identify a crypto facilitator or buy crypto yourself from an exchange.
  3. Fund your self-directed IRA through a transfer or rollover.
  4. Hold your crypto in the IRA until you are 59 ½ years old. If you fail to do this, you will have to pay the penalty for early withdrawal.

Keep in mind; a self-directed IRA carries the exact regulatory requirements as an ordinary IRA. More importantly, since a crypto IRA is a self-directed IRA, you are responsible for your investment decisions.

Pros of Crypto IRAs

Crypto IRAs have several advantages. Let us take a closer look at some of them:

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They Diversify Your Portfolio

Cryptocurrencies are not correlated with traditional investments such as stocks and bonds. For this reason, they are an excellent way of diversifying your portfolio, safeguarding your balance in times of market uncertainty.

Crypto IRAs Have a Potential of Giving You High Returns

Even though cryptocurrencies are volatile, it is good since volatility means high gains. For instance, Bitcoin was at $5,200 on March 15, 2024, but is now at $43581.30, barely two years later.

Crypto IRAs Allow You to Enjoy Tax Advantages

As long as you hold your crypto assets in your crypto IRA, you do not have to pay any taxes. That is all thanks to the IRS Notice 2014-21, which designates crypto as personal property.

Cons of Crypto IRAs

Saving for retirement with crypto is not without its disadvantages. Learn about them below.

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High Fees

Crypto IRAs carry various fees, unlike conventional IRAs that allow you to invest at no cost. You will have to pay for account creation, management, and other things. So, be sure to learn about these fees before investing in crypto for retirement.


Crypto prices are pretty erratic, to say the least, which is why you need a moderate to high-risk tolerance. However, crypto can be pretty rewarding with a long-term goal in mind.

Diversify Your Nest Egg with a Crypto IRA

If you are looking for a way to diversify your retirement portfolio and enjoy the potentially high returns from cryptocurrencies, in the long run, investing in a crypto IRA is a great decision.

Thanks to this guide, you know everything you need to get started, so all that remains for you is to take action. Remember, be sure to find a good custodian to ensure your crypto investments work for you down the line.